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March 24, 2016

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Republicans on a Limb

POSTED: April 07, 2014, 7:00 am

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The U.S. Bureau of Labor Statistics released its latest numbers this week. Its preliminary number for people on payrolls, reported by private-sector establishments, is 116 million. That figure is higher than the last peak in January 2008, before President Barack Obama took office. This marks 49 straight months of job growth from the second year of the president’s first term. It took four years and three months for both the president and George W. Bush to get private-sector employment back to the level when they took office. The difference is that employment was falling when Obama took office, so it took an additional year to make up for the jobs lost during the Great Recession while Bush was still president.

Early on, Republicans chided President Obama that he could not blame everything on Bush. Now Republicans have a problem, because going forward, it will be difficult to blame this president. Republican strategy so far is to be anti-Obama. So it means they cannot claim any success in the economy.

So far, payroll employment in the private sector has returned. The federal deficit is half its size, relative to the economy, from when the president took office. The broadest measure of economic growth, GDP per capita (the total value of all goods and services produced in the United States per person) is back to its peak too. The stock market is at record highs. Corporate profits are at a record high, as well. Business investment has returned to its previous peak, as well. The key components of the economy that Republican policies aim at are all back to record levels.

Going forward, what is it the Republican Party has to sell to America? At the moment, the president is selling a vision and set of policies to address the unequal growth of the recovery. Incomes and wealth are back for the 1%, but not for the 99%. Rep. Paul Ryan (R-Wis.), after blaming inner-city men for having a culture of laziness, put forth a budget this week that aims to help the 1%. The message of his budget for the 99% is that they will benefit if the top 1% receives even more favors from the government while cutting assistance to the bottom 20%.

That sell is tough. So far only the top 1% is gaining. If you think the problem facing the 99% is that the 1% needs even more before everyone else benefits, then you could buy the Republican plan. Or, as the Republicans hope, if you think people in the middle are better off if people on the bottom lose, then you could buy their plan. This is the limb Republicans have climbed out on.

The problem for the Republicans is that the children of the middle are facing low wages, the lack of employer-provided health insurance and they need help like the Supplemental Nutrition Assistance Program to hold on. Families also are increasingly dependent on fair wages for women to make ends meet.

In the 1980s, when policies like gutting the purchasing power of the minimum wage hurt the bottom 20%, the middle did not make gains on those at the top. Instead, they merely did better than the bottom. The wages of the middle are far more dependent on how the bottom 20% does than on what happens to pay in the CEO office. The past 35 years make that clear. When the middle saw rising incomes from 1946 to 1979, the bottom saw rising incomes. The pay of those in the middle ultimately is a bargain on how low the bottom goes, not a bargain based on the idea of CEOs that workers need a raise when CEOs exercise their stock options. Young workers understand their bargaining position is weak because of the high cost of losing a job.

Broad-based, inclusive growth helps everyone. Increasingly, this is clear to Washington and the international elite. It looks like this is a moment when sentiment and facts line up. Or is the way off the limb for Republicans a hope that Democrats will flinch if the rhetoric turns to lazy inner-city men?


Dr. William Spriggs is the chief economist for the AFL-CIO. Follow Dr. Spriggs on Twitter: @WSpriggs.

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